US online retailer, Amazon, has launched its Prime membership subscription package in China as it tries to compete with the dominance of Alibaba and JD.com in the world’s largest e-commerce market.

Amazon has focused much of its effort in Asia on India, its most important international market but it still believes it can make headway in hotly-contested China where it only accounts for between 1% and 3% of the entire e-commerce market.

The membership which entitles subscribers who place orders worth more than 200 yuan ($29 at current exchange rates) to free shipping will be cheaper than the version offered in the US because it does not include the video and music streaming element.

“The Chinese consumer is quite partial to Western brands and Amazon sees potential for growth in demand in this segment,” said John Chamberlain, a senior technology researcher at Virtus International.

“Amazon’s been operating in China for more than ten years but it’s barely scratched the surface such is the strength of the hold that Alibaba and JD.com have on the market. The content streaming aspect of the membership has been left out due to the complexity of the laws surrounding the provision on content over the internet in China. Companies like Netflix are still struggling to gain entry and this won’t be something Amazon will want to get bogged down with,” added Chamberlain.

Virtus International says it expects the Prime package to gain reasonable traction in China but not to the point where, as a platform, Amazon could begin to eat meaningfully into the dominance of Alibaba and JD.com.

About Virtus International:
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